Please read this section with these questions:
1. What is the core difference between interest e-commerce and search e-commerce?
2. What factors have driven the development of interest e-commerce in China?
3. How should we view the future trend of #TikTok Made Me Buy It?
In our daily online shopping, we generally buy products in two ways: one is the more traditional search e-commerce, and the other is the emerging interest e-commerce (or content e-commerce). There are great differences between them, and the proportion of their market share is also slowly changing.
1. What are search e-commerce and interest e-commerce?
Search e-commerce is represented by domestic Taobao and JD.com, and foreign Amazon and Google. When users have clear purchasing needs, they will search for the products they need on these shopping platforms, compare similar products, and then make purchasing decisions.
Interest e-commerce is represented by domestic Douyin, Taobao live broadcast section, Xiaohongshu, and foreign TikTok, YouTube, Facebook, and photo wall. Users originally had no shopping needs, but just browsed these apps for entertainment or casually, but after seeing the pictures or video content, they had a strong interest and impulse and wanted to own the same product. Coupled with the stimulation of “limited time discounts”, purchase behavior was unconsciously generated.
2. Four major differences between interest e-commerce and search e-commerce
1. Do users have clear needs
When users choose to search e-commerce platforms, they usually have clear shopping needs and know what they want. It may be because they lack daily necessities, or because a product in a physical store is too expensive and they want to find a cheaper one online. In short, they must have a clear purpose to open this shopping platform. Users regard the shopping platform as their own tool, and when they have needs, they let this platform help them achieve the goal of “more, faster, better and cheaper”.
However, even if there are clear needs, they will be limited by language and text descriptions. When I buy things on Taobao, I often encounter situations where I don’t know how to describe the products I want in my mind. For example, I saw a Bohemian-style skirt in a scenic spot once, but I didn’t know the word “Bohemian” at the time. I thought of many ways, searching for words such as “colorful, ethnic style, stripes, long skirt, lace, diamond, tassel, vacation”, and flipping through dozens of pages before I learned that this style is called “Bohemian”. It was really too much effort.
Users choose interest e-commerce platforms. They usually come to play, and they don’t necessarily have clear shopping needs. In most cases, they don’t expect to buy anything. They just watch short videos and live broadcasts to kill time. As a result, they place an order when they see a fun video. After an hour of browsing, I looked at the backstage and found that more than a dozen orders were placed. The platform is not a tool for them to shop, but a tool for entertainment, and shopping is derived from entertainment. Users don’t need to use their lifelong knowledge of Chinese to accurately describe the products they want. If they see and like them in short videos or live broadcasts, they can buy them directly. What you see is what you get.
2. Whether the nature of the product depends on strong categories
In addition to having clear shopping needs, users who shop on search e-commerce platforms also have another prerequisite, that is, users must first know that the product exists in the market before searching for the name of the specific product or category (except for products that spend money on advertising on the platform to gain exposure). For example, if I want to buy a box of mineral water, I will go to Taobao to search for “mineral water”, or directly search for “Nongfu Spring” and other brands that I can think of at the first time. It exists in my cognition, and I also know very clearly that I need it, so I will complete this purchase behavior.
The book “Scientific Entrepreneurship” mentions the two concepts of strong categories and weak categories many times. In summary, strong categories are categories that are strongly needed by consumers and can enter the customer’s shopping list; weak categories are categories that cannot enter the customer’s shopping list, or even if they enter the shopping list, it is difficult for customers to remember this brand. Most of the products that meet the two conditions of “clear demand” and “I know it exists” belong to strong categories. If your product belongs to a weak category, users may not know that there is such a thing in the world, and it is difficult to spontaneously think that they need this product. For example, many girls like to wear contact lenses, but if they are not cleaned properly on a daily basis, it is easy to breed bacteria and harm the eyes. In order to solve this pain point, the merchant has specially launched a product: electric contact lens cleaner. This is simply a lazy artifact. You only need to put the removed contact lenses in and gently press the button, and it will automatically help you clean it. This product sounds good and can solve the pain points of a class of customers. However, if this product does not occupy a good exposure position through advertising, it is difficult for users to spontaneously search for the keyword “electric contact lens cleaner” and it is difficult to obtain the search traffic of the platform. This is why it is difficult for weak categories to obtain a large amount of free natural search traffic on the search e-commerce platform. In addition, the advertising fees of search e-commerce platforms are generally not low, and it will be difficult for weak category products to survive solely on this platform.
If users shop on interest-based e-commerce platforms, the impact of the product you sell on traffic will not be very strong regardless of whether it belongs to a strong category. When users open social platforms, they do not have clear shopping needs and purposes. Instead, they just happen to see something interesting that arouses their desire to buy, so they buy it directly. From this perspective, let’s look at the example of the contact lens cleaner mentioned above. If the merchant chooses an interest-based e-commerce platform like Douyin, and at the same time works hard to make the product introduction video, usage scenarios, and text and pictures that solve user pain points, when a user sees this video, if it can successfully hit his pain points, the user will sigh because it is a weak category and he has never heard of this product: “Hey, there is such a magic tool! Hurry up and buy it back to try it!”
So search e-commerce products rely on strong categories, while interest e-commerce products do not rely on strong categories.
3. User purchase decision path
After reading the above two differences, I believe that you must know the difference between search e-commerce and interest e-commerce in the purchase decision path. I have drawn two transaction flow charts:
It is worth noting here that in the decision-making process of search e-commerce, each link will lose a certain proportion of customers. And before users go to the shopping cart to settle, they usually compare prices before buying, which makes it difficult for merchants to escape the dilemma of price wars. However, there is generally no price comparison link in the decision-making process of interest e-commerce. Once the customer’s interest is aroused, the customer will directly place an order after seeing the price and feeling that it is worth it. As a merchant, you can get rid of the trouble of many competitors emerging in the user’s decision-making process to compete for customers at low prices.
4. Competitive relationship in the target market
The last difference is about the market competition for target customers. We have used and heard of many search e-commerce platforms, such as Taobao, JD.com, Pinduoduo, etc. They compete for the stock market under the premise of user demand. Even if there are one hundred more search e-commerce platforms, the total demand for tissue paper and laundry detergent purchased by the people of the country every month will not increase. All merchants and platforms are sharing the same “cake”. Interest e-commerce platforms have two ways to go: the first is to compete with search e-commerce for the stock market, using short videos and live broadcasts to show product performance and cost-effectiveness, and with similar “buy one get ten free” rhetoric, so that users can easily stock up for half a year in one go, and overdraw some customers’ purchasing needs on search e-commerce early; the second is to develop incremental markets, various fun, interesting, and beautiful new products, such as clothing, have a lot of incremental space, merchants can show their skills and create their own product content home, interest e-commerce platforms give us a lot of room to play, as long as customers are willing to pay, the vast incremental market can be played as we want.
Clearly these four important differences, when deciding what platform to make what product, you can see the pros and cons of each choice, and you can also better use interest e-commerce platforms such as TikTok to realize monetization.
3. The development of domestic interest e-commerce
The development history of interest e-commerce on domestic platforms such as Douyin and Kuaishou is as follows: In the beginning, when users were not fully accustomed to and accepted live shopping, the entry threshold for users was lowered by products with small amounts and low customer unit prices. For example, if you buy 5 packs of snacks for 9.9 yuan and the shipping is free, users will think that it is only 9.9 yuan anyway, and even if they are not delicious, the loss is not big. So driven by the tempting videos and live broadcasts, they made their own shopping attempts on interest e-commerce platforms. In order to accelerate the formation of user habits and eliminate users’ distrust of short videos and live streaming, these platforms have also made a lot of efforts, such as: (1) Strictly select supply chains to solve quality and price problems; (2) Introduce a large number of celebrities or big IP anchors to focus on live streaming; (3) Introduce well-known trademark brands to enter the platform live streaming e-commerce; (4) Tilting more platform traffic and display resources to the live streaming section; (5) Crazy price subsidies and professional live streaming training. Under the platform’s “crazy user education”, users have completed the process of “never thought about buying – dare not buy – buy cheap – buy slightly more expensive – willing to buy all categories – squat in the live streaming room to buy – and develop the habit of buying in the live streaming room”. After several years of fermentation, many domestic consumers have become accustomed to interest e-commerce and have become deep users. Now almost everyone buys things on Douyin. Even my father proudly said to me: “Flute, look, I grabbed a small rice cooker on Douyin!”
IV. The present and future of TikTok’s global interest e-commerce
1. The current volume and status of TikTok’s interest e-commerce
As of February 17, 2022, the cumulative reading volume of the #TikTok Made Me Buy It tag exceeded 8.8 billion, which means that TikTok has achieved considerable results in using short videos or live broadcasts to arouse users’ interest in buying from scratch, and then to place orders. Although it has not yet significantly shaken the position of search e-commerce led by Amazon and Google, it has also had a significant impact on overseas search e-commerce.
At present, TikTok has opened small-scale tests for e-commerce and bringing goods in several regions such as the UK and Southeast Asia. The total merchandise transaction volume in the first half of 2022 has exceeded US$1 billion, which is equivalent to the volume of the whole year of 2021. Among them, the average monthly total merchandise transaction volume in the Indonesian market reached US$200 million, and the average monthly total merchandise transaction volume in the UK market reached US$24 million. It is understood that in 2022, the TikTok e-commerce team also set a goal of achieving a total merchandise transaction volume of US$470 billion (nearly RMB 3 trillion) within 5 years, and plans to complete the expansion of more than 10 key countries by the end of 2023. (Note: The data comes from an article published by the official account “LatePost” on August 10, 2022)
Tips
If you want to develop with the platform, you must understand in which direction the platform will invest money and resources next, and then move forward in this direction.
2. Prediction of TikTok e-commerce development
Based on my many years of experience in starting businesses abroad, doing cross-border e-commerce, and exploring TikTok in the past two years, combined with my understanding of the trend of short video live broadcast new media and interest e-commerce trends, plus TikTok’s e-commerce strategic layout in the past five years, the area marked with “☆” in the figure below is the track I am very optimistic about and choose as my career development track.
As I mentioned earlier, I think it must be a good time to enter the market in the early stages of TikTok’s e-commerce development. I also believe that if TikTok wants to achieve its own goals, it will definitely invest a lot of resources in the TikTok e-commerce sector, tilt a lot of traffic, become the main promoter of user education on its own platform, and help merchants. However, I also want to emphasize again: Now that we are in TikTok, we must repeatedly improve our product strength and content strength, exercise our operational capabilities for transactions, familiarize ourselves with platform rules, and develop a good sense of the Internet, so that we
are fully prepared for TikTok’s global e-commerce growth.
After reading this section, you must have your own judgment on the future of TikTok’s global e-commerce.